IDEXX Laboratories Announces Third Quarter Results
WESTBROOK, Maine, Oct. 29, 2020 /PRNewswire/ --
-- Achieves revenue growth of 19% on a reported basis and 18% on an organic
basis driven by Companion Animal Group Diagnostics recurring revenue
growth of 23% reported and 21% organic
-- High revenue growth supported by sustained strong global recovery in the
pet healthcare market
-- Delivers EPS of $1.69, representing 36% growth on a reported basis and
47% on a comparable constant currency basis, reflecting benefits from
high CAG Diagnostics recurring revenue gains and proactive cost controls
IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, today announced third quarter results, as well as business and market condition updates related to the 2019 novel coronavirus (COVID-19) pandemic.
Third Quarter Results
The Company reports revenues of $722 million for the third quarter of 2020, an increase of 19% on a reported and 18% on an organic basis. Third quarter results were driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 23% reported and 21% organic, supported by similarly high organic gains in both U.S. and International markets, as well as revenue growth of 18% in the Livestock, Poultry and Dairy ("LPD") business. Third quarter growth benefited by approximately 1% from revenues associated with OPTI Medical Systems COVID-19 human PCR testing. Third quarter results were moderated by constrained new CAG instrument placement levels and lower Water business revenues, reflecting pressures on non-compliance water testing, impacted by factors related to the COVID-19 pandemic.
Earnings per diluted share ("EPS") was $1.69 for the third quarter, representing 36% growth on a reported basis and 47% growth on a comparable constant currency basis, which excludes $0.24 per share impact from an ongoing litigation matter involving a royalty claim under an expired patent license agreement and tax benefits from share-based compensation of $0.18 per share. Comparable constant currency growth measures are non-GAAP financial measures and have been modified to exclude the related operating expense impact of $27.5 million, in addition to share-based compensation tax benefits, as described in our footnotes. EPS results reflected benefits from strong CAG Diagnostics recurring revenue growth, which supported gross margin gains and operating expense leverage, augmented by proactive cost control efforts. Overall operating margins improved 70 basis points on a reported basis compared to prior year levels and 470 basis points on a comparable constant currency basis.
"We are very pleased to report excellent third quarter financial results, which reflect impressive global growth in our CAG business and outstanding efforts by the IDEXX team to support the needs of our customers during a dynamic global pandemic environment," said Jay Mazelsky, the Company's President and Chief Executive Officer. "We are very encouraged by the sustained strong recovery in pet healthcare, which reinforces our optimism in the long-term growth potential for our companion animal diagnostics business and positions us well to deliver continued strong financial results."
Market Trend and COVID-19 Pandemic Impact Update
Companion animal healthcare markets continued to build on the sharp V-shaped recovery seen in the second quarter globally. U.S. veterinary practices have experienced strong clinical demand benefiting from continued solid non-wellness visit growth, incremental growth from postponed wellness visits and an increase in new patient visits. In the U.S., same-store clinical visit growth sustained at 6% within the third quarter, supported by 3% growth in non-wellness visits and 11% growth in wellness visits, benefiting from pent-up demand. Revenue growth at veterinary practices is also benefiting from higher growth in services, including an increasing utilization of diagnostics, which supported 11% growth in same-store practice revenue in the U.S. in the third quarter. Solid same-store clinical visit gains have continued in October, reflected in 5% same-store clinical visit growth for the two-week period ended October 16. U.S. companion animal practice weekly key metrics are available in the Q3 2020 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.
Strong global companion animal market trends have supported exceptional demand for CAG diagnostic products and services. Global CAG Diagnostics recurring revenues sustained their growth at high levels through the third quarter reflected in greater than 20% growth early in the quarter and growth closer to 20% in the later part of the quarter, benefiting in part from pent-up demand for wellness diagnostic testing in the U.S..
These trends are encouraging and reflect the resilience of the pet healthcare market. Potential effects related to ongoing COVID-19 case management efforts are challenging to predict and may pressure future revenues should enhanced social distancing policies and higher infection rates impact veterinary clinic operations in certain regions.
In managing IDEXX businesses, the Company continues to provide high levels of service delivery and product support for customers during this time and maintains high health and safety standards to protect its employees and ensure business continuity. In an effort to continue to protect the health and safety of our workforce and their families and communities, the majority of IDEXX employees continue to work remotely and travel continues to be limited.
Third Quarter Performance Highlights
Companion Animal Group
The Companion Animal Group generated 20% reported and 18% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 23% on a reported and 21% on an organic basis. Growth was similarly high across IDEXX's major modalities in the third quarter, reflecting continued strong growth in clinical visits and related diagnostic products and services. Overall CAG revenue growth was constrained by lower instrument placements, which improved relative to second quarter trends, but continue to be impacted by COVID-19 related restrictions on access to veterinary practices. Despite these constraints, IDEXX achieved 3,173 premium instrument placements, supporting a 14% expansion of IDEXX's global premium instrument installed base.
-- IDEXX VetLab® consumables generated 23% reported and 22% organic
revenue growth, supported by ongoing expansion of our global premium
instrument installed base, continued strong customer retention,
increases in testing utilization and moderate net price gains.
-- Reference laboratory diagnostic and consulting services generated 24%
reported and 21% organic revenue growth, led by growth in U.S. markets
benefiting from strong market growth including high demand for wellness
testing, as well as moderate net price realization and benefits from net
new customer additions.
-- Rapid assay products revenues grew 20% on a reported and organic basis,
led by high growth in SNAP® 4Dx® Plus sales volumes in U.S. markets
benefiting from strong overall market conditions including high demand
for wellness testing.
Veterinary software, services and diagnostic imaging systems revenues grew 4% on a reported and organic basis, supported by double-digit growth in subscription-based service revenues and strong growth in new veterinary software system placements. Overall growth was moderated by declines in diagnostic imaging systems placements.
Water
Water revenues declined 5% on a reported basis and 4% on an organic basis for the quarter, reflecting continued pressures in non-compliance testing volumes impacted by the COVID-19 pandemic.
Livestock, Poultry and Dairy ("LPD")
LPD revenues grew 18% on a reported and organic basis, driven by strong growth in the Asia Pacific region. LPD results were supported by improvements in core swine testing volumes, continued benefits from African Swine Fever diagnostic testing programs in Asia, and growth in poultry testing. These gains were moderated by lower herd health screening levels, compared to strong prior year results.
Gross Profit and Operating Profit
Gross profits increased 23% on a reported and constant currency basis. Gross margin of 58.5% increased 150 basis points compared to prior year period results on a reported basis and 200 basis points on a constant currency basis. Gross margin results reflected reference laboratory productivity gains on high revenue growth, favorable mix from strong consumable revenue and lower instrument revenue, as well as benefits from moderate price gains.
Operating margin was 23.8% in the quarter, 70 basis points higher than the prior year period results on a reported basis and 470 basis points higher on a comparable constant currency basis, supported by operating expense leverage on stronger than expected revenue growth. Operating expenses increased 22% on a reported basis, reflecting the $27.5 million accrual related to the ongoing litigation noted earlier, and increased 9% on a comparable constant currency basis. Operating expenses in the third quarter included a $10 million contribution to establish the IDEXX Foundation, a donor-advised charitable fund, focused on making a positive impact on our communities. Priorities for the IDEXX Foundation will include supporting education in the veterinary and STEM fields, including advancing diversity, equity and inclusion in animal healthcare. Given the strong recovery in its core CAG business, the Company plans to advance prioritized investments in support of its long-term growth strategy and anticipates sustaining a relatively higher rate of operating expense growth moving forward.
2020 and 2021 Financial Outlook
The Company is maintaining suspension of full-year 2020 guidance due to the unpredictability of potential future impacts from the COVID-19 pandemic and is not providing preliminary 2021 guidance at this time.
Conference Call and Webcast Information
IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its third quarter 2020 results and management's outlook. To participate in the conference call, dial 1-888- 771-4371 or 1-847-585-4405 and reference confirmation number 49967945. Individuals can access a live webcast of the conference call through a link on the IDEXX website, www.idexx.com/investors. An archived edition of the webcast will be available after 1:00 p.m. (EDT) on that day via the same link and will remain available for one year.
About IDEXX Laboratories, Inc.
IDEXX Laboratories, Inc. is a member of the S&P 500® Index and is a leader in pet healthcare innovation, serving practicing veterinarians around the world with a broad range of diagnostic and information technology-based products and services. IDEXX products enhance the ability of veterinarians to provide advanced medical care, improve staff efficiency and build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for livestock and poultry and tests for the quality and safety of water and milk and point-of-care and laboratory diagnostics for human medicine. Headquartered in Maine, IDEXX employs more than 9,000 people and offers products to customers in over 175 countries. For more information about IDEXX, visit: www.idexx.com.
Note Regarding Forward-Looking Statements
This earnings release contains statements about the Company's business prospects and estimates of the Company's financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are included above under "Third Quarter Results," "Market Trend and COVID-19 Pandemic Update" and "Gross Profit and Operating Profit" and elsewhere and can be identified by the use of words such as "expects", "may", "anticipates", "intends", "would", "will", "plans", "believes", "estimates", "projected", "should", and similar words and expressions. Our forward-looking statements include statements relating to, among other things, the impact of the COVID-19 pandemic and the Company's planned future investments and operating expense growth. These statements are intended to provide management's expectation of future events as of the date of this earnings release; are based on management's estimates, projections, beliefs and assumptions as of the date of this earnings release; and are not guarantees of future performance. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among other things, the adverse impact, and the duration, of the effects of the ongoing COVID-19 pandemic on our business, results of operations, liquidity, financial condition and stock price, as well as the other matters described under the headings "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, as well as those described from time to time in the Company's other filings with the U.S. Securities and Exchange Commission available at www.sec.gov. The Company specifically disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
Statement Regarding Non-GAAP Financial Measures
The following defines terms and conventions and provides reconciliations regarding certain measures used in this earnings release and/or the accompanying earnings conference call that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to as non-GAAP financial measures. To supplement the Company's consolidated results presented in accordance with GAAP, the Company has disclosed non-GAAP financial measures that exclude or adjust certain items. Management believes these non-GAAP financial measures provide useful supplemental information for its and investors' evaluation of the Company's business performance and liquidity and are useful for period-over-period comparisons of the performance of the Company's business and its liquidity and to the performance and liquidity of our peers. While management believes that these non-GAAP financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.
Constant currency - Constant currency references are non-GAAP financial measures which exclude the impact of changes in foreign currency exchange rates and are consistent with how management evaluates our performance and comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, gross profit, operating profit, and EPS results by restating results to the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates. These estimated currency changes impacted third quarter 2020 results as follows: decreased gross profit growth by approximately 0.1%, decreased gross profit margin growth by 50 basis points, decreased operating expense growth by 0.2%, decreased operating profit margin growth by 20 basis points, and had an immaterial impact on EPS growth. Estimated currency changes also decreased 2020 EPS growth by 2% for the nine months ended September 30, 2020. Constant currency revenue growth represents the percentage change in revenue during the applicable period, as compared to the prior year period, excluding the impact of changes in foreign currency exchange rates. See the supplementary analysis of results below for revenue percentage change from currency for the three and nine months ended September 30, 2020.
Growth and organic revenue growth - All references to growth and organic growth refer to growth compared to the equivalent prior year period unless specifically noted. Organic revenue growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates and revenue from certain business acquisitions. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three and nine months ended September 30, 2020. The percentage change in revenue resulting from acquisitions represents incremental revenues attributable to business acquisitions that have occurred since the beginning of the prior year period. We exclude only acquisitions that are considered to be a business from organic revenue growth. For more detail on what acquisitions we consider to be a business in computing organic growth, please see Management's Discussion and Analysis of Financial Conditions and Results of Operations, Non-GAAP Financial Measures, contained in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) - Comparable constant currency operating expense growth, operating profit growth, and operating profit margin gain (or growth) are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates and non-recurring or unusual items (if any). Management believes that reporting comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) provides useful information to investors because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding key metrics used by management. Comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) should be considered in addition to, and not as replacements of or superior measures to, operating expense growth, operating profit growth, and operating margin gain reported in accordance with GAAP. Comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) exclude a $27.5 million operating expense impact from an ongoing litigation matter involving a royalty claim under an expired patent license agreement recorded in the third quarter of 2020. This impact and those described in the constant currency note above reconcile reported operating expense growth, operating profit growth, and operating margin gain for the third quarter of 2020 to comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) for the same period.
Comparable constant currency EPS growth - Comparable constant currency EPS growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates and the tax benefits of share-based compensation activity under ASU 2016-09 and non-recurring or unusual items (if any). Management believes comparable constant currency EPS growth is a more useful way to measure the Company's business performance than EPS growth because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding a key metric used by management. Share-based compensation tax benefits increased third quarter 2020 EPS by $0.18 per share, and 2020 EPS by $0.31 per share for the nine months ended September 30, 2020. Comparable constant currency EPS growth excludes a $27.5 million operating expense impact from an ongoing litigation matter involving a royalty claim under an expired patent license agreement recorded in the third quarter of 2020, which reduced third quarter 2020 EPS by $0.24 per share, and reduced 2020 EPS by $0.24 per share for the nine months ended September 30, 2019. These impacts and those described in the constant currency note above reconcile reported EPS growth to comparable constant currency EPS growth for the third quarter and year-to-date through September of 2020.
Free cash flow - Free cash flow is a non-GAAP financial measure and means, with respect to a measurement period, the cash generated from operations during that period, reduced by the Company's investments in property and equipment. Management believes free cash flow is a useful measure because it indicates the cash the operations of the business are generating after appropriate reinvestment for recurring investments in property and equipment that are required to operate the business. See the supplementary analysis of results below for our calculation of free cash flow for the nine months ended September 30, 2020 and 2019.
Debt to Adjusted EBITDA (Leverage Ratios) - Adjusted EBITDA, gross debt, and net debt are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure of earnings before interest, taxes, depreciation, amortization, non-recurring transaction expenses incurred in connection with acquisitions, share-based compensation expense, and certain other non-cash losses and charges. Management believes that reporting Adjusted EBITDA, gross debt and net debt in the Debt to Adjusted EBITDA ratios provides supplemental analysis to help investors further evaluate the Company's business performance and available borrowing capacity under the Company's credit facility. For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA ratios are calculated, see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2020 2019 2020 2019
Revenue:
Revenue $721,789 $605,303 $1,985,717 $1,801,462
Expenses and Income:
Cost of revenue 299,183 260,353 824,179 767,062
Gross profit 422,606 344,950 1,161,538 1,034,400
Sales and marketing 108,202 104,551 318,526 312,499
General and administrative 105,031 66,337 231,111 186,653
Research and development 37,517 34,260 102,472 98,033
Income from operations 171,856 139,802 509,429 437,215
Interest expense, net (7,902) (7,004) (24,880) (23,503)
Income before provision for income taxes 163,954 132,798 484,549 413,712
Provision for income taxes 17,633 23,960 77,376 76,464
Net Income:
Net income 146,321 108,838 407,173 337,248
Less: Noncontrolling interest in subsidiary's earnings 102 1 187 24
Net income attributable to stockholders $146,219 $108,837 $406,986 $337,224
Earnings per share: Basic $1.71 $1.26 $4.77 $3.91
Earnings per share: Diluted $1.69 $1.24 $4.70 $3.85
Shares outstanding: Basic 85,314 86,198 85,293 86,206
Shares outstanding: Diluted 86,690 87,667 86,635 87,633
IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2020 2019 2020 2019
Operating Ratios
Gross profit 58.5 57.0 58.5 57.4
% % % %
(as a percentage of revenue):
Sales, marketing, general and administrative expense 29.5 28.2 27.7 27.7
% % % %
Research and development expense 5.2 5.7 5.2 5.4
% % % %
Income from operations(1) 23.8 23.1 25.7 24.3
% % % %
(1)Amounts presented may not recalculate due to rounding.
IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
Three Months Ended Three Months Ended
Sept. 30, Percent of Sept. 30, Percent of
2020 Revenue 2019 Revenue
Revenue:
CAG $638,017 $533,130
Water 33,272 34,906
LPD 36,971 31,370
Other 13,529 5,897
Total $721,789 $605,303
Gross Profit
(1)
CAG $368,297 57.7 $298,517 56.0
: % %
Water 23,064 69.3 25,389 72.7
% %
LPD 22,768 61.6 18,169 57.9
% %
Other 8,477 62.7 2,875 48.8
% %
Total $422,606 58.5 $344,950 57.0
% %
Income from
CAG $139,434 21.9 $117,691 22.1
% %
Operations
(1)
:
Water 15,243 45.8 16,930 48.5
% %
LPD 10,505 28.4 4,850 15.5
% %
Other 6,674 49.3 331 5.6
% %
Total $171,856 23.8 $139,802 23.1
% %
Nine Months Ended Nine Months Ended
Sept. 30, Percent of Sept. 30, Percent of
2020 Revenue 2019 Revenue
Revenue:
CAG $1,756,113 $1,589,397
Water 95,537 99,980
LPD 103,369 95,980
Other 30,698 16,105
Total $1,985,717 $1,801,462
Gross Profit
CAG $1,012,107 57.6 $897,482 56.5
(1)
: % %
Water 67,491 70.6 72,397 72.4
% %
LPD 63,919 61.8 56,897 59.3
% %
Other 18,021 58.7 7,624 47.3
% %
Total $1,161,538 58.5 $1,034,400 57.4
% %
Income from
CAG $426,062 24.3 $370,600 23.3
% %
Operations
(1)
:
Water 43,383 45.4 47,467 47.5
% %
LPD 28,417 27.5 17,707 18.4
% %
Other 11,567 37.7 1,441 8.9
% %
Total $509,429 25.7 $437,215 24.3
% %
(1) Effective January 1, 2020, we
modified our management reporting to the
Chief Operating Decision Maker to
provide a more comprehensive view of the
performance of our operating segments by
including costs that were previously not
allocated to our segments. Prior to
January 1, 2020, certain costs were not
allocated to our operating segments and
were instead reported under the caption
"Unallocated Amounts". These costs
included costs primarily consisting of
our R&D function, regional or country
expenses and unusual items. Corporate
support function costs (such as
information technology, facilities,
human resources, finance and legal),
health benefits and incentive
compensation were charged to our
business segments at pre-determined
budgeted amounts or rates. Beginning
January 1, 2020, the segments will
reflect these actual costs allocated to
the segment based on various allocation
methods, including revenue and
headcount. Foreign exchange losses on
settlements of foreign currency
denominated transactions are not
allocated to our operating segments and
are instead reported under our Other
reporting segment.
IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
Three Months Ended
Sept. 30, Sept. 30, Dollar Reported Percentage Percentage Organic
2020 2019 Change Revenue Change from Change from Revenue
Growth(1) Currency Acquisitions Growth(1)
Net Revenue
---
CAG $638,017 $533,130 $104,887 19.7 1.0 0.7 18.0
%
% % %
United States 428,105 357,810 70,295 19.6 1.1 18.6
% % %
International 209,912 175,320 34,592 19.7 2.9 16.8
%
% %
Water 33,272 34,906 (1,634) (4.7) (0.7) (4.0)
% % %
United States 16,634 16,794 (160) (1.0) (1.0)
% %
International 16,638 18,112 (1,474) (8.1) (1.2) (6.9)
% % %
LPD 36,971 31,370 5,601 17.8 0.3 17.5
%
% %
United States 3,784 3,649 135 3.7 3.7
% %
International 33,187 27,721 5,466 19.7 0.4 19.3
%
% %
Other 13,529 5,897 7,632 129.5 129.5
% %
---
Total Company $721,789 $605,303 $116,486 19.2 0.8 0.6 17.8
%
% % %
United States 454,836 380,184 74,652 19.6 1.0 18.6
% % %
International 266,953 225,119 41,834 18.6 2.2 16.4
%
% %
---
Three Months Ended
Sept. 30, Sept. 30, Dollar Reported Percentage Percentage Organic
2020 2019 Change Revenue Change from Change from Revenue
Growth(1) Currency Acquisitions Growth(1)
Net CAG Revenue
---
CAG Diagnostics recurring revenue: $567,416 $460,974 $106,442 23.1 1.0 0.8 21.3
% % % %
IDEXX VetLab consumables 218,605 177,276 41,329 23.3 1.2 22.1
% % %
Rapid assay products 70,593 58,930 11,663 19.8 % 19.8
% %
Reference laboratory diagnostic 254,223 204,919 49,304 24.1 1.2 1.8 21.1
% % % %
and consulting services
CAG Diagnostics services and 23,995 19,849 4,146 20.9 1.0 19.9
% % %
accessories
CAG Diagnostics capital - 29,336 32,608 (3,272) (10.0) 1.2 (11.2)
% % %
instruments
Veterinary software, services and 41,265 39,548 1,717 4.3 0.2 4.2
% % %
diagnostic imaging systems
---
Net CAG revenue $638,017 $533,130 $104,887 19.7 1.0 0.7 18.0
% % % %
---
(1)See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.
IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
Nine Months Ended
Sept. 30, Sept. 30, Dollar Reported Percentage Percentage Organic
2020 2019 Change Revenue Change from Change from Revenue
Growth(1) Acquisitions Growth(1)
Currency
Net Revenue
---
10.5 (0.4) 0.7 10.1
% %
CAG $1,756,113 $1,589,397 $166,716 % %
11.8 1.1 10.8
%
United States 1,188,493 1,062,715 125,778 % %
International 567,620 526,682 40,938 7.8 (1.1) 8.9
% % %
Water 95,537 99,980 (4,443) (4.4) (2.1) (2.3)
% % %
United States 47,510 48,157 (647) (1.3) (1.3)
% %
International 48,027 51,823 (3,796) (7.3) (4.1) (3.2)
% % %
7.7 (2.7) 10.4
% %
LPD 103,369 95,980 7,389 %
United States 10,803 10,221 582 5.7 5.7
% %
7.9 (3.0) 10.9
% %
International 92,566 85,759 6,807 %
90.6 90.6
Other 30,698 16,105 14,593 % %
---
10.2 (0.6) 0.6 10.2
% %
Total Company $1,985,717 $1,801,462 $184,255 % %
11.6 1.0 10.6
%
United States 1,257,617 1,127,347 130,270 % %
International 728,100 674,115 53,985 8.0 (1.6) 9.6
% % %
---
Nine Months Ended
Sept. 30, Sept. 30, Dollar Reported Percentage Percentage Organic
2020 2019 Change Revenue Change from Change from Revenue
Growth(1) Currency Acquisitions Growth(1)
Net CAG Revenue
---
CAG Diagnostics recurring revenue: $1,565,595 $1,382,196 $183,399 13.3 (0.4) 0.8 12.8
% % % %
IDEXX VetLab consumables 603,379 519,646 83,733 16.1 (0.6) 16.7
% % %
Rapid assay products 192,681 181,966 10,715 5.9 (0.4) 6.3
% % %
Reference laboratory diagnostic 703,300 621,469 81,831 13.2 (0.2) 1.8 11.5
% % % %
and consulting services
CAG Diagnostics services and 66,235 59,115 7,120 12.0 (0.6) 12.7
% % %
accessories
CAG Diagnostics capital - 72,040 92,883 (20,843) (22.4) (0.4) (22.0)
% % %
instruments
Veterinary software, services and 118,478 114,318 4,160 3.6 (0.1) 3.8
% % %
diagnostic imaging systems
---
Net CAG revenue $1,756,113 $1,589,397 $166,716 10.5 (0.4) 0.7 10.1
% % % %
---
(1)See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
Amounts in thousands (Unaudited)
September 30, December 31,
2020 2019
Assets:
Current Assets:
Cash and cash equivalents $175,587 $90,326
Accounts receivable, net 337,593 269,312
Inventories 217,597 195,019
Other current assets 137,902 124,982
Total current assets 868,679 679,639
Property and equipment, net 547,624 533,845
Other long-term assets, net 631,104 618,991
Total assets $2,047,407 $1,832,475
Liabilities and Stockholders'
Equity:
Current Liabilities:
Accounts payable $71,933 $72,172
Accrued liabilities 362,326 322,938
Line of credit 288,765
Current portion of long-term debt 49,983
Deferred revenue 42,599 41,462
Total current liabilities 526,841 725,337
Long-term debt, net of current portion 853,316 698,910
Other long-term liabilities, net 226,135 230,403
Total long-term liabilities 1,079,451 929,313
Total stockholders' equity 440,576 177,473
Noncontrolling interest 539 352
Total stockholders' equity 441,115 177,825
Total liabilities and stockholders' equity $2,047,407 $1,832,475
IDEXX Laboratories, Inc. and Subsidiaries
Select Balance Sheet Information (Unaudited)
September 30, June 30, March 31, December 31, September 30,
2020 2020 2020 2019 2019
Selected Balance Sheet Information:
Days sales outstanding(1) 41.5 44.4 41.5 40.5 41.8
Inventory turns(2) 1.9 1.6 1.9 2.2 2.0
(1)Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.
(2)Inventory turns represent inventory-related cost of product revenue for the twelve months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)
Nine Months Ended
Sept. 30, Sept. 30,
2020 2019
Operating:
Cash Flows from Operating Activities:
Net income $407,173 $337,248
Non-cash adjustments to net income 98,798 91,945
Changes in assets and liabilities (76,842) (125,448)
Net cash provided by operating activities 429,129 303,745
Investing:
Cash Flows from Investing Activities:
Purchases of property and equipment (92,768) (109,058)
Acquisition of intangible assets / business / equity investment (918) (559)
Net cash used by investing activities (93,686) (109,617)
Financing:
Cash Flows from Financing Activities:
Repayments on revolving credit facilities, net (289,625) (169,532)
Issuance of senior notes 200,000 100,000
Debt issuance costs (4,995) (154)
Payment of acquisition-related contingent consideration (1,580) (2,255)
Repurchases of common stock (182,815) (160,969)
Proceeds from exercises of stock options and employee stock purchase 39,230 28,739
plans
Shares withheld for statutory tax withholding on restricted stock (9,029) (7,849)
Net cash used by financing activities (248,814) (212,020)
Net effect of changes in exchange rates on cash (1,368) (1,906)
Net increase (decrease) in cash and cash equivalents 85,261 (19,798)
Cash and cash equivalents, beginning of period 90,326 123,794
Cash and cash equivalents, end of period $175,587 $103,996
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
Nine Months Ended
Sept. 30, Sept. 30,
2020 2019
Free Cash Flow:
Net cash provided by operating activities $429,129 $303,745
Investing cash flows attributable to purchases of property and equipment (92,768) (109,058)
Free cash flow(1) $336,361 $194,687
(1)See Statements Regarding Non-GAAP Financial Measures, above.
IDEXX Laboratories, Inc. and Subsidiaries
Common Stock Repurchases
Amounts in thousands except per share data (Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2020 2019 2020 2019
Shares repurchased in the open market 330 721 683
Shares acquired through employee surrender for statutory tax withholding 1 1 31 38
Total shares repurchased 1 331 752 721
Cost of shares repurchased in the open market
$- $91,051 $179,623 $165,198
Cost of shares for employee surrenders 360 277 9,029 7,849
Total cost of shares $360 $91,328 $188,652 $173,047
Average cost per share - open market repurchases
$- $275.50 $249.20 $241.56
Average cost per share - employee surrenders $393.12 $286.65 $292.03 $209.20
Average cost per share - total $393.12 $275.53 $250.96 $239.87
Contact: John Ravis, Investor Relations, 1-207-556-8155
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SOURCE IDEXX Laboratories, Inc.
